When you want to grow and protect the value of your business across generations
Generational succession is when your business is passed to family members, generally, your children. With generational succession, there is continuity of family ownership and often the business itself.
Sounds simple doesn’t it? Then why do so many families end up fighting in dispute right at the point when the parents, business and children are most vulnerable? It is important that generational succession is managed as closely and diligently as if you were selling your business to a stranger. Making sure that everyone understands what the transition will mean and that everyone is aware of their role and responsibilities, avoiding misunderstandings and disputes.
If you are looking to hand your business to your children or relatives, there are a few key issues for you to think about:
- Do your children want to run the business?
- Are your children capable of running the business right now?
- What is your business really worth (business valuation)?
- Are you willing to hand over control of the business and leave the children to take control?
- How will the transition be financed (are your children able to buy you out? Will you maintain an interest in the business? If you do maintain an interest, will you have a role in the business or will you be a silent partner?)
- How should the transition be structured?
- What will the impact of you stepping away from the business be on the customer base?
- What are the tax implications of the generational succession plan? There can be some fairly hefty taxation implications for both you and your children if this issue is not managed correctly!
Often external advisers can be a major benefit and smooth the transition path.
Hayes Knight have the experience and expertise (and sensitivity) to provide accurate and meaningful advice that protects your interests, achieves the best outcome for your family, and minimises disputes.
Next steps
Talk to a Hayes Knight adviser near you who can assist you with your succession planning needs. We’ll organise a time to have an initial conversation about your needs.
If you choose to move ahead and engage us to manage your generational succession needs, we will issue you with an engagement letter identifying the scope of what we will be doing for you, who in our team will be doing it, the likely cost and payment terms, and the terms that we operate under. Once the engagement letter is signed and we have accepted you as a client, we get underway.
If it any point we come across issues not identified in our initial engagement, either problem areas or opportunities, we will talk to you about them and clarify the next steps with you.
